After Capitalism - part one

         


NOTE ON SOURCES


For the sake of flow in this work I have generally not stopped mid-stream to quote the sources of any statistical information within it. Many of the figures given on UK housing, wages and work practices come from the UK Office of National Statistics or other independent studies. All of the statistical information contained in the text is readily available online and easily confirmed via an internet search by anyone wishing to do so.







INTRODUCTION


THE SYSTEM SHOULD WORK FOR THE PEOPLE - NOT THE OTHER WAY ROUND

Since the creation of money as a universal token of exchange for goods and services, people have generally needed that money to live within the laws of their land. From the days of feudal agriculture through the Industrial Revolution, society has required its citizens and family units to earn money through work - and reasonably useful work has tended to be available for most of those in need of it.

But we are no longer in that position.

Advances in manufacturing methods have meant that industries throughout the world make more products for less manpower than ever before. At the same time, increasing bills and property prices relative to wages have meant that, more than ever before, a family unit in the so-called First World often needs both adult partners to work in order to pay the necessary bills of modern existence. We are told here in the UK that "a record number of people are in jobs." Yet many of those jobs are now in pointless busy-work professions created in large part to maintain the system which demands that work must be done in order to receive money - and which then, for most people, takes all that money back in bills by the next pay-day.

In fact, as we will discuss later, the free market capitalist system - under which almost every nation in the world functions - is a system which by definition must keep the vast majority of its population comparatively poor in order to avoid rampant inflation. And it is becoming increasingly unsuited to our technologically advancing world, increasingly placing its people under a yoke of hard work and hardship which is largely false, and entirely unnecessary.

Here we define and examine the shortcomings of the existing free market system, and provide information on an alternative socio-economic system which should allow people to live wealthier, more secure, more leisure-oriented lives without any major step-change or revolutionary action in society.


PART ONE - IDENTIFYING THE PROBLEM


SOME BACKGROUND

The principle of organised work, with a monetary reward which can be exchanged for other goods, is a very versatile system for creating an advanced, cohesive society in which individuals not only work for themselves but for others, and can benefit from comforts and services beyond what they could create for or by themselves. This cohesion of effort for a result far in advance of what one individual can do is one of the main things separating humanity from other animals, and could be said to be one of mankind's greatest attributes.

The problem is that free-market capitalism distorts and perverts this achievement in several ways. It uses a reward system based not on the wider good done by an individual but by a very narrow value judgement based entirely on the maximum monetary profit that a product or service can be sold for... so useless trinkets such as jewellery and perfumes make dealers a fortune, whilst nurses or care workers scrape less than a living on low wages. It leaves people free to generate for themselves as much of that reward as they can, which in a free market monetarist system where money supply and flow are tightly controlled by economic policies designed to avoid inflation inevitably leads to a lessening of the available reward for others, promoting selfish and uncaring attitudes. Influences such as birth-right and nepotism further distort the capitalist value system, so that the end result is a reward system based much more on the worst of human traits rather than the best.

In its pure state, free market capitalism is a harsh, unbending rule of strength where the nature of that strength is defined and shaped by the very people who hold most of it. And as the well-known board game 'Monopoly' demonstrates with elegant simplicity, pure capitalism also rather quickly becomes untenable as the finite amount of available wealth is increasingly concentrated with the few most powerful until the vast majority of the populace exist in utter poverty. As a result of this fundamentally flawed ideology, the power-holders of most nations of the world recognise that undiluted capitalism is a finite and doomed system eventually unable to sustain itself. So we get a hybrid of capitalism with a certain amount of welfare and support of the poor ('problems' that are created by the system itself), which is usually called by the power-holders some variation on the phrase 'caring capitalism'. It is no such thing. It is capitalism with an element of Marxism added to keep the populace in a state of non-protest and bare functionality, aided by the power-holders' friends in the media. Phrases like 'caring capitalism' are used to boost the image of capitalism amongst a populace who have no real idea of what the term means, and to avoid at all costs any idea that 'socialism', 'communism', 'Marxism' etc. are in any way present in our society. For the power-holders who both create and benefit from it, capitalism must be the only acceptable or viable future in the minds of the populace.

So the hybrid system currently adopted by most global nations - capitalism with a minimal amount of Marxist-style provision for the poorest in society - has evolved to create a world run by and for a power-holding few, with a relatively small amount of people very comfortably secure, and a large majority existing as effectively slaves to a system they have been indoctrinated into believing wholeheartedly is best for them. This hybrid, although still an unnecessarily onerous yoke for the majority, is at least able to function in the long term - as long as that majority are kept active, just above the poverty line, and convinced that this is the best they can hope for. The system keeps the majority 'busy' for most of their waking hours (often artificially so in this day and age of technological advancement making actual production of goods less labour-intensive), and therefore unlikely to be able to spend too much time actually thinking abstractly about their lives or situations, and then bombards them with a TV- and media-land of non-news, propaganda and tittle-tattle to try to divert any chance of meaningful philosophical or political thought.

At the same time, capitalism survives partly because it appeals to the basic survival instinct present in all animals including humans. The carrot of wealth and security is a powerful magnet in a people whose natural survival instinct is bolstered by a lifelong indoctrination within an atmosphere of competition, threat and veiled desperation in school and work. The fact that this carrot is, by definition of the free market capitalist system, unreachable by all but a select few (many of whom are pre-selected by birth) does not fatally harm the idea of its attainability amongst a populace so locked in to the system's validity. That the carrot of wealth, security or happiness - or at least a bit more of the carrot than most people currently enjoy - is so keenly desired by such a majority is indicative of how little the current system meets most people's needs. And the fact that this inadequacy is not only unrecognised by the masses but the system which creates it is supported by most of them as the right and only path, is indicative of how brainwashed the majority of the populace actually are.


THE INFLUENCE AND HARM OF THE MEDIA

In any system of power, those in power are by definition doing very well out of the existing system and are therefore highly resistant to real change - any change tends to be confined to either (1) making their own lives and situations even more opulent and gratifying, or (2) giving just enough back to the general populace to maintain the balance of apathy to avoid any uprising. In both these scenarios, the behaviour of the mass media is a central weapon in the power-holders' arsenal.

Again, by definition of the costs involved, the traditional mass media is owned and steered by those who are amongst the most privileged in a monetarist society... and so are also amongst the most important and influential figures in the capitalist/monetarist power-holder's hierarchy. (This of course includes in the UK the BBC which is essentially a government-run media network). Consequently, anything perpetrated by any written or TV broadcast mass-media as being 'news' or 'factual' must be viewed with these points in mind.

It has long been the case that any 'news' or 'factual' content in any mass media has been steered in the direction of maintaining the existing power structures of any given country. So those in real disagreement with the state are ignored, or if this is not possible, either vilified or ridiculed. Political parties squabbling over piffling differences in a one-ideology state are portrayed as encompassing the entire range of political thought, and the concept of not voting for any of these irrelevant nincompoops is portrayed as giving up any right of protest (when in fact it is the complete opposite - those who do not vote for such an inequitable and flawed system are in fact the ones who have the most right of anyone to complain about it). 'The economy' is talked about in reverent terms in capitalist countries as though it is some sort of god, unable to be criticized or reprimanded, unable to be changed, and which the populace exists largely to serve rather than the other way round.

In 'democratic' countries, the incumbent government is allowed to be criticized up to a point - but the inherent system never is. At the same time (at least here in the UK), the pro-government/leader/system media bias in other, especially non-friendly, countries are treated with a patronising, smugly finger-wagging contempt. The hypocrisy of it is both laughable and maddening, and it is a sinister indication of the populace's indoctrination that it is so little recognised.

I read somewhere years ago a comment that went something like: "in a dictatorship, the news is always good, to convince the population that all is well. In a democracy, the news is always bad, to keep people in a state of apathy and prevent action". This is partly true, but in reality the news in the Western world tends to be bad in its specifics but wholly supportive of the existing system, which is never really blamed for any of these bad events which dominate the 'news'. In fact, one of the Western media's main roles is that of 'expectation management' - accepting that the system which they appear to live to serve is the best and only option in life.

So it is easy to see that the Western mass media, far from being 'free' as it so often trumpets itself as, is another tool of the power-holders' quest to maintain the system which serves them so well. It perpetuates the myth of freedom, the myth of honesty, the myth of impartiality, whilst it upholds the validity of a system which leaves the vast majority of its viewers/readers unfairly disadvantaged. I am sure that many of the rank and file journalists and broadcasters in these media organisations genuinely feel that they are doing the public a valid service. Those who don't must have their reasons for staying quiet and obedient - Apathy? Helplessness? Selfishness? A feeling of being trapped by their own financial burdens? In any event, the mass media propaganda machine rolls on, steered by the hands of the power-holders and willingly staffed by the same populace as it represses. In that sense it is a microcosm of society as a whole, but its harm to real free thought is catastrophic.


WORK, CREDIT/CONTROL AND HOW CAPITALISM SURVIVES

Early Industrial Revolution business owners took advantage of the advent of labour-saving machinery to create profitable factories which provided an increasing variety of goods and services. Before this, some 98% of the UK working population worked in agriculture - basically, food production. In recent years it has been estimated that only around 2% work in agriculture. So food production has been made tremendously more efficient by engineering and technological advances, at the expense of jobs, and those displaced from farming had to find work in other areas.

Subsequently in the last 200 years we have seen the rise (and sometimes, fall) of shipping, railways, mining, mass industrialisation, the auto and aero industry, the health industry, the oil industry, and the computer industry. All of these have provided new avenues of employment as others have diminished, and the system of work for money for goods created by others' work has continued. However, the only way new industries can be accommodated is by established industries either declining or becoming more efficient (read: more production from less staff). Looking at the situation the other way round, capitalism has perhaps been historically fortunate that as one industry has declined or reduced its staff requirements, another has been growing to take up the surplus workers.

In recent times however, there has been a lack of suitable industries to employ all of those seeking to take part in the work-for-money-for-goods merry-go-round that the capitalist system both demands for its subjects' obedience, and requires for the free market system to function. Big business self-interest strives for constant increases in productivity from its workers, and when that productivity results in much less employment than there are people available for work, well those people have to be slotted into the system somewhere. So in spite of the Industrial Revolution and a myriad of labour-saving devices, most Western people are working as long or longer hours than their parents' did, have more onerous burdens on their time, and now rely on huge, employment-heavy and low-paying service industries to make their lunches or dinners, look after their children or elderly relatives, cut their hair and - increasingly - intrude into their affairs with vast engines of bureaucracy. So, many people now work in 'industries' such as Human Resources, Health and Safety, Risk Management and many more, which usually start out as good ideas with good intentions but become huge vehicles of employment which do not 'produce' anything and whose costs are heaped onto the businesses they meddle with. So, increased efficiency and productivity is quite often sought - especially by small businesses - not to increase profit, but simply to cover the increasing costs of keeping the doors open. Such 'industries' are facilitated and encouraged by the power-holders to keep as many people as possible in full-time 'busy-work' and maintain the illusion that everyone has to work hard (harder and harder in fact) in todays' society.

There is a phrase that says "work expands to fill the time available". In the same way, it can be said that "bills expand to use the money available" - this is in fact a prerequisite of the capitalist system, that the vast majority live on what might be called a 'subsistence wage', an amount of money that - when all household and living bills are paid - is gone by the time the next pay packet comes round. So, as some prices come down in real terms (electrical goods and basic cars are good examples), so others go up (insurances and property prices are classic examples) to 'take up the slack'. In addition, certain new technology is insinuated into the fabric of life to the point where it is almost impossible to function without it - for example, phone call prices have come down, but even the smallest business must have some kind of online access to function (in the UK, sending payroll information to the HMRC can only be done online, to pick just one), and so small business owners still have similar communication overheads, just split in a different way. The end result is that one way or another the populace in general has no more disposable income than before, but the glib economic and political puppets of the power-holders can claim that people are better off than ever, and that the country is richer than ever, as the country's (and individual people's) assets are 'worth' so much more.

If people really are so much better off than ever, there would be no need for people's increasing reliance on credit cards. The explosion of easily available credit in the 1980's was spun to the public as giving them 'extra freedom', when it was exactly the opposite - it was a convenient way of increasing short-term consumerism whilst tying the borrowers ever more tightly into the existing system as they usually found they were unable to pay off the balance in one lump and were now in yet more long-term, legally binding repayment contracts. The recent proliferation of pay-day loan sharks shows that many people are so close to the bread-line that they sometimes have no choice but to borrow a few pounds at astronomical interest rates to tide them over for a week or two until the next wage packet comes in. The huge increase in both long- and short-term credit in the last 30 years is a fine way of taking more money from the populace and giving it over to private financial institutions - without actually adding to the 'official' inflation figures as the interest paid on the goods is not considered.


WHY A SUBSISTENCE WAGE AND HARD WORK ARE MANDATORY

In a free-market capitalist economy, the price of any good is usually the highest that the vendor feels they are able to charge - there are obvious partial exceptions, when a vendor charges a lower price to generate extra sales and make their profit that way, with an eye on either greater volume of sales or greater profit later on if those 'new' customers continue to buy their product at full price - but generally the price of any good or service is a 'floating' one based on the maximum the market will stand. By definition therefore, an excess of disposable income amongst the general population results in not only increased spending, but increased prices as vendors are able to creep their prices up to a 'new' maximum...

... And we get inflation. And the actual value of people's income (disposable or otherwise) in terms of their buying ability goes back down to the level it was before the 'boom'. In 1930's Germany, almost everyone was a 'millionaire', but a loaf of bread cost thousands of German marks.

So it can be seen from this simple analysis that by definition the bulk of the population in a floating price economy will exist on a subsistence wage, good enough to pay the essential bills and - maybe - have a little left over for small luxuries before their income is swallowed up by the simple expedient of just staying alive with a roof over their heads, a means of transport to their jobs and a non-empty stomach. The free market, floating price economy simply does not allow any other situation to exist. There can never be 'more', because inflation of all prices swallows up any additional disposable income. And there cannot be 'less' because otherwise the whole work/money/bills equation falls apart amidst a morass of people who can no longer even get to work or pay a mortgage or rent. The bare minimum of Marxist support for those unable to afford even the basic living requirements comes into play when the system fails to deliver on its own terms - and increasingly in modern society there now has to be financial support for some people who work full-time but still cannot afford to 'live' in the sense of having food and shelter.

Some pro-capitalist free marketeers may point out at this stage that we have not talked about what might be termed the 'velocity' of money - that is, if currency is flowing quickly in an economy then both that currency and the economy has more value. For example, if 20 is spent once in one week, it is 'worth' 20, but if 2 is spent ten times in the same period it is also 'worth' 20, and so if applied on a wider scale it gives every a greater value. This is a fair point, BUT it really only applies to benefit the average person if that currency is disposable income... if the average mortgage or rent, or rates, or fuel bills, or mandatory insurances go up it does not create any currency velocity amongst the average populace at all - in fact it reduces it because a higher percentage of an average person's weekly wage is now taken by the necessity of survival. There is no 'choice' in this spending, simply a necessity to hive off more of one's total income in paying unavoidable bills. Any 'velocity' is instead is an increasing flow of money away from the average individual and towards big financial institutions, corporations and government coffers... all of which starts to sound very familiar.

So the just-barely-adequate 'subsistence wage' is the one and only possible situation for the vast majority of the population in a free market, floating price capitalist economy. That is one half of the 'hard work/subsistence wage' equation. So why is hard work so keenly desired by the power holders?

As previously mentioned, in pre-Industrial Revolution times, the vast majority of workers were employed in farming, to produce food. Many of the rest were employed as builders or stone-masons. Women did not 'work' in terms of receiving a wage, unless they were from very poor families. There was no 'retirement' for the average worker, and life expectancy for both sexes was in the forties or fifties. It was an organised society, but a relatively primitive one, with a tiny minority of wealthy landowners and a large majority of poor workers either serving the rich or producing food for all.

Interestingly though, working hours over the course of a year were quite short by modern standards - there is also evidence that the work was carried out at a more leisurely pace than today's frenetic lifestyle. 'Hunter-gatherer' societies, the forerunner to pre-Industrial Revolution society, worked still fewer hours.

With the advent of the Industrial Revolution, factories were able to offer year-round working with the added possibility of working during hours of darkness using artificial lighting, and annual working hours increased significantly. Business owners targeted long hours to maximise their return on expensive new factory machinery, and working weeks spiralled up, often to well over 60 hours per week.

Henry Ford was an early proponent of shorter working hours (and introduced it unilaterally into his own factories)... but like a true capitalist he did it for business reasons, not humanitarian ones. He reasoned that all workers needed adequate leisure time to actually consider it worthwhile to buy, and feasible to use, the items being produced in all these factories, so shorter working hours were necessary to increase consumerism and thus profits for business. At the same time an increase in worker protection laws and organizations saw a gradual decrease in working hours in the developed world. Nevertheless, though current annual working hours in the UK have reduced from the all-time high of the early Industrial Revolution, they are significantly higher now than they were for farm labourers in the Middle Ages. But, given the increases in technology allowing for much greater productivity per employee, why are such long working hours still necessary - to the point where 'busy-work' industries are fostered to help maintain the maximum number of people working in five- or six-day-a week jobs?

We have already seen how the barely adequate subsistence wage for the large majority is the only amount of remuneration possible in a free market, floating price economy. Therefore, any attempt to reduce working hours whilst maintaining the same wages would not only leave goods-producing businesses with the likelihood of having to raise prices, but may also tempt people into still working long hours for the now greater available money, prompting the sort of inflation which a floating price free market economy inevitably creates.

On this last point, social conditioning plays a part too. UK employees average among the longest weekly working hours in the developed world, yet another heavily populated country - the Netherlands - has one of the shortest working weeks in Europe. Other countries such as Spain and France have much more relaxed attitudes to alcohol consumption, usually taking wine with lunch as a matter of course for example, yet the UK has bigger alcohol-related crime and health problems than either. So socio-political conditioning also needs to be considered as perhaps the most important single factor in determining behaviour patterns amongst a population. The UK in particular also has serious issues arising from the perpetual greed of big property owners and developers, an avarice encouraged by successive governments, whereby ridiculously high property prices result in both domestic and business property bills of near crippling proportions.

But ultimately, long working hours in a modern, technologically advanced society comes down to one thing: control. The power-holders are resolute in maintaining 'stability', which essentially means a system which keeps them at the top of a wealth and power pyramid. They are also aware that the existing system is inequitable and unfair to the vast majority, but completely lack either the creativity or the will (or both) to effect a meaningful change. And the more inequitable and unfair the system is, the more control over a general population must the power-holders have, and keeping that population busy for most of their waking hours is one way of distracting people from the unequal harshness of their situations. It is perhaps telling that two countries with amongst the most consistently right-wing governments of the democratic world - the USA and the UK - also have amongst the longest weekly working hours as well.


THE LIFESPAN OF CAPITALISM

So free market, floating price capitalism has several mandatory but less than pleasant attributes for the average person:

Long working hours.

A 'subsistence' wage just adequate to pay necessary bills.

Consequently, a lack of both money and time to pursue many interests outside working for the system.

... And this results in concentrated, all-pervading propaganda and coercion from mainstream media, education and authority figures to convince the general populace that this harsh and inequitable regime is the best and indeed only feasible option available for them.

Having said this, it is possible for this system to be a stable one in the long term, and indeed much effort is expended by governments and banks to maintain a balance between mass poverty and 'too much' spare spending money resulting in excessive inflation and an inevitable reaction in the form of recession. The real power-holders - the ones holding the most concentrated material wealth - need worldwide economic stability in order to maintain their own positions. And they do whatever it takes to maintain this stability, whilst at the same time fortifying and increasing their own wealth wherever possible. In the UK at least, property prices are a prime example of this.

For example, average UK house prices in 1975 were 10,388. In early 2016 they were 198,564, or an increase of 1911%. In 1975, the average UK full time wage was 2815, and in early 2016 was 27,600, an increase of 980%. In other words, average UK house prices have risen 95% MORE than average wages.

Now, in that same time the average mortgage interest rate has fallen from around 9% in 1975 to around 3.6% in 2016. Assuming no deposit, a 25 year mortgage on 198,564 at 3.6% interest rate (i.e. 2016 averages) is 1004.74 per month or 12,056.88 per year, whilst a 25 year mortgage on 10,388 at 9% (i.e. 1975 averages) is 87.18 per month or 1046.16 per year.

The end result of this is that, for a typical 25 year mortgage, average yearly mortgage repayments in 1975 were around 37.16% of a single average annual income, whilst in 2016 the figure is 43.68%. Average UK working hours in 1975 were 41 hours per week, whilst in 2016 the average was 42.7 hours per week.

So from this it can be seen that the percentage of average annual income spent on mortgages - although it has gone up somewhat - has not gone up nearly as much as actual property selling prices themselves. The record low interest base rate of the past few years has allowed financial institutions to offer low interest percentage mortgage deals whilst still maintaining their percentage margins (2.5 to 3% above base rate has been quite consistent for decades). But because those percentage margins are made on much more expensive property prices (and thus larger lend amounts), the private lenders are making much more money in the long term - whilst the Bank of England is now having to maintain low interest rates on the money it lends private institutions in order to maintain economic stability and avoid mass default on mortgages.

However, in reality the system is gradually drifting towards a huge implosion - and the reason is that a free market economy, and greed, go hand in hand but are mutually incompatible in the long term. One of the big problems with 'free market stability' is that, when one product or service is reduced in price, another tends to increase to swallow up the end users' gain. In other words, large scale economic stability (in the sense of maintaining the just-adequate subsistence wage for the vast majority) is still present, and it is simply the way in which that wage is used up which changes.

In the UK in the 1980's the Thatcher government made a big noise about their policy of selling off council-owned homes to tenants (whilst keeping much quieter about their lack of actually replacing the bulk of these sold homes to house other poor families). In recent times the growth of the 'buy-to-let' investor has been rapid, as an increasing inability to obtain an affordable mortgage has left many young families with no choice but to forgo property ownership and rent their homes from investor-owners. So there has been a relatively low-percentage but nevertheless significant overall shift in home habitation as a trend, moving away from state-owned, subsidised housing to home ownership to renting from private property investors... a classic example of capitalism's inevitable tendency for wealth to gravitate upwards to fewer and fewer, richer and richer people. The 'official' poor (i.e. those whom government simply can't ignore) are still subsidised in their housing of course - but now more often than ever in dwellings privately owned by investors, another typically capitalist signature where the average person in the form of the taxpayer funds the accumulation of private wealth for the few.

So the percentage of annual income spent on mortgages has gone up somewhat in the past 40 years, but not out of all proportion... but the money made from property by developers, landowners, and financial institutions has gone up tremendously. Some products have gone down in price in real terms (as already mentioned, electrical goods are a prime example), others have gone up. Mass manufacturing has seen a huge shift in production to cheaper providers such as China and the Far East, whilst farming has become both more efficient due to technological improvements, yet no more profitable due to a reduction in prices paid by big supermarket chains who now command the vast majority of the buying market. In most cases, retail prices have not reflected the real reductions in production costs, and the profit margins of the high street retailer have soared, as have rent and rates bills. The power-holders who control the world's financial and political direction have not actually maintained real stability at all. By dint of their own avarice, they have gradually squeezed more and more of the world's wealth into their own pockets. Economic stability (in the sense of removing all of the average person's wages by month's end and providing them with food, shelter and a few small luxuries) has been maintained - but at what long-term effect to the world and most of the people in it? How long can such exploitation continue? What happens when all the cheap labour is used up, or when no more insurances or hamburgers can be forced onto a First World populace already groaning under the weight? In the past few hundred years the world has gone from being controlled and overrun by a few select countries, to being controlled and directed by a few select individuals and private organisations. Each have created some positive advances, a whole lot of chaos and destruction, benefitted greatly from all of it - and, as the winners, have been in charge of spinning history to portray themselves as the good guys. It can only be hoped that one day the First World will wake up and see what has really happened - and what needs to be done.


"You want to know something? We are still living in the Dark Ages. The Dark Ages - they haven't ended yet." Kurt Vonnegut